Conceptual origin and definition
The term wholesale originated around 1800 from the older form Grossierer ( French marchant grossier ).
Since the 17th century in the merchant language the terms are wholesale and unlike en détail used to compare retail trade . The designation large originally did not mean “large” as opposed to small, but the quantity large (twelve dozen).
Wholesale (obsolete: Engros -Handel / -Business / bearings / -Versand) in the functional sense is when market participants goods they procure is generally not even working or processing (merchandise) from manufacturers or other suppliers and to Resellers, processors, commercial users (e.g. authorities , educational institutions) or other bulk buyers (e.g. canteens , associations ), but not, or at least not primarily, to private households . In the official statistics, a company or a company is assigned to wholesaling if the wholesaling activity generates greater added value than a second or more other activities (wholesale in the institutional sense ).
Wholesale sees itself as a link between the various sales levels . The buyers or customers of the wholesale trade are companies in the retail trade, craft, hospitality industry, regional wholesalers, industrial or other commercial operations. Decisions about the type and number of wholesalers to be involved are part of the distribution policy as part of the industrial marketing mix . Wholesale companies, however, also have a wide range of instruments for independent trade marketing (wholesale marketing ). In particular because of the risk of being switched off , d. H. To no longer find enough suppliers and / or customers, professional trade marketing is essential. Contractual vertical and / or horizontal cooperations initiated by wholesalers effectively counteract the risk of elimination, e.g. B. Contract trade, exclusive distribution; Purchasing cooperative as the procurement center for retailers or the integration of retail companies into a group (voluntary chain, purchasing group of non-cooperative legal form) organized by a wholesaler as a system center.
In quantitative terms, the importance of (domestic) wholesaling is already evident from the fact that, according to the Federal Statistical Office (2015), German wholesalers had turnover of around 1,154 billion euros in 2013. Wholesaling provides employment to around 1.8 million people. The Federal Association of Wholesale, Foreign Trade, Services e. V. (BGA) states a turnover of 1,157 billion euros for 2014.
In terms of quality , the importance of wholesaling for the overall economy (according to Schenk ) lies primarily in the fact that it does
- Generation of competition
- Organization of (sales and procurement) markets,
- Assumption of (sales and procurement) risks and
contributes to a reduction in transaction costs within the entire value chain .
Wholesaling takes on a multitude of functions as a link between producers and retailers, bulk buyers and other traders. It is the sales level immediately after the producers, which is typically very stock-intensive , so that it is associated with high storage risks and capital commitment .
Wholesalers and retailers relieve any consumer goods manufacturer of the costly task of selling their goods directly to individual end users. For example, a manufacturer produces 10,000 pants. He sells them in smaller lots to various wholesalers, who in turn sell the pants in even smaller lots to many retailers, who ultimately sell individual items to individual consumers. The advantages brought about by the involvement of wholesalers are obvious: market development, risk sharing, lowering of distribution costs and easier financing. Similar to retail, wholesale fulfills these numerous trading functions, among others:
Time bridging (warehousing and logistics)
Most of the time, the production of goods and their use do not coincide. Wholesalers take on the bridging of the time by storing the goods (therefore also called the storage function). However, it is not only the constant stockpiling, but also the logistical services of the wholesale trade that make it possible that the differentiated needs of customers can be met at any time.
Examples: Potatoes are only harvested in summer or autumn. During this time, the wholesaler buys a lot and stores them. He then sells this stored supply throughout the year, because consumers want to buy and eat potatoes in winter and spring too. - Without the distribution of newspapers and magazines organized by the press wholesaler (partly with a worldwide procurement radius) with the quickest possible "fine distribution" to thousands of sales outlets, the current supply of readers would be unthinkable.
This function is carried out either as a sales wholesaler or as a buy-out wholesaler, depending on which side of the market the focus of marketing activities is on.
Industrial companies usually produce their goods in large quantities in order to fully utilize their capacities (cost reduction potential). The wholesaler buys large quantities from one or a few manufacturers and regroups them into smaller quantities according to customer requirements. The wholesaler's customers can usually purchase any number of goods. It follows: buying in large quantities, selling in small quantities.
The wholesaler buys small quantities from many companies and sells the entire quantity on to one or a few companies.
- Example of agricultural products:
The dairy buys small quantities of milk from many farmers in order to produce milk products from the large quantities.
- Example recycling:
The scrap dealer buys metals from many craftsmen in order to sell the large amount of scrap to a processor.
The production B2B (PVH) buys goods from producers and sells them on to producers in the subsequent production stage, if necessary after processing them in-house and / or with precise timing in further processing processes (just-in-time principle).
Purchase and sale of veneer wood, rubber, steel.
Wholesalers put together their own range of products based on the needs of their customers from the often narrow production programs of various manufacturers . Customers will therefore find a more or less large selection of goods in the trade, which differ in type, quality and design. Without a trading company, a customer would have to purchase the desired products from manufacturers with immense effort. U. with manufacturers scattered around the world.
Certain products require a certain period of maturity after their production until they are fully salable, or they have to be post-treated, processed or refined before being resold. The refinement function includes all ancillary services of the retailer that make the product ready for sale and do not completely change it (in contrast to the ancillary service, the product is produced or created for the essential service).
- Roasting coffee ( grinding the coffee changes the original product so much that it is no longer a matter of refinement)
- Sort out rotten fruit
- Let the fruits ripen
- Let the wine mature
- Coating of workpieces
The wholesaler provides information and advice on the properties, possible applications, operation and maintenance of the products. As a sales marketing measure, customer service often makes the sale of goods possible in the first place. Correspondingly, wholesalers can offer their suppliers special supplier services as a procurement marketing measure, e.g. B. Market information, goods transport or easier acceptance of goods. A distinction is made between commercial and technical service. Commercial service includes, for example, extended guarantees, simplified payments, delivery services or online services. Technical service includes installation and assembly, repairs and maintenance work.
Wholesale is used by manufacturers as a distribution channel , namely as a sales channel when selling their products or as a procurement channel when purchasing goods for production (e.g. materials, operating resources, semi-finished products). The latter mainly characterizes the industrial B2B trade. Since the wholesaler knows the wishes and ideas of his customers, he can help them to organize the right sales or procurement market . He supports the manufacturers by informing them in good time about changes in demand or supply . This information can be taken into account during product development . This function is becoming more and more important with the increasing demand of customers for tailor-made products and just-in-time delivery.
Sales financing (loan granting)
Sales financing is the sale of goods on account. By granting a payment term (e.g. payable within 30 days), the dealer grants the customer a credit for the period between the delivery of the goods and the payment date stated on the invoice. In this way, the wholesaler's customers can use the purchased products without having to provide financial resources immediately. In addition, many wholesalers also offer their customers long-term financing offers, often involving banks. E.g .: wholesaler as lessor
Business forms of wholesale
A distinction is made between the following types of business in wholesale:
- Pick-up wholesale market, goods are picked up by the customer from the wholesaler.
- Cash-and-carry wholesale ( self -service wholesale ), the customer chooses the desired goods himself (self-service), pays the purchase price in cash and takes them with him (carry) ; the most common abbreviation for this form of sale is C & C.
- Purchasing cooperative
- Purchasing office
- Specialist wholesalers
- Wholesale market
- Warehouse wholesale
- Land trade
- Assortment wholesale, offers several types of goods; the range is wide and can be deep or shallow. The term “assortment wholesale ” is actually a pleonasm , since every wholesaler puts together assortments. However, it is customary in some industries, e.g. B. in the book trade, to emphasize the larger range of the "assortment" compared to specialist wholesalers or wholesalers tied to a publisher.
- Specialized wholesale, offers only one type of goods; the range is narrow and generally deep.
- Central Cooperative
- Delivery wholesalers, goods sold are delivered to customers with their own vehicles or by freight carriers.
Location of the wholesaler
The location is understood to be the location of the commercial establishment of a company. The decision for a particular location depends on numerous location factors. In each individual case, it must be checked to what extent the location factors determine the costs for the production factors and the income for the operational services.
The optimal operational location is where a maximum profit can be achieved with a given equipment configuration.
- Sales , the location is placed close to the customer in order to be able to deliver quickly and inexpensively.
- Workforce , the location depends on the wage level and the workforce available (quantitative and qualitative).
- Procurement , the location is based on the spatial proximity to the suppliers (applies in particular to the wholesale trade ).
- Land prices , the location depends on the land prices (or the amount of rents for operating rooms)
- Competition , the choice of location can be based on the local presence of competitors in order to make the entire local location more attractive by expanding the range in the same branch (so-called agglomeration effect ).
- Culture , the choice of location can be based on the "soft location factor" of the local cultural offer in order to be able to acquire (and retain) qualified personnel more easily.
- Taxes and public charges (political location factors) , with otherwise the same location factors, locations with lower taxes and duties are decisive for the choice of location.
- Subsidies (political location factor) , the choice of location is also based on direct and indirect grants or concessions that are granted for a business location.
- Traffic situation , the location is located in areas with good traffic connections (well-developed road and / or rail network).
Current challenges in wholesale
The additional risk of being eliminated in the age of the internet by new "intermediaries" in the virtual goods business ( e-commerce ) can transform wholesalers into new chances of being involved, on the one hand, if they use the internet themselves for their procurement and sales processes and, on the other hand, by setting a profile for their suppliers and Communicate an increase in benefit to customers through their own website. "It is not 'the Internet' that exacerbates the risk of being shut down for wholesalers, but rather renouncing its active use!"
However, the well-established traditional sales structures (such as 3-stage sales, in which products are sold from wholesalers to handicrafts to the end customer) sometimes also act as a "brake block", in which necessary changes and possible innovations through subsequent value-added stages blocked. In addition, as measured by spending on research and development, wholesaling is one of the economic sectors with the lowest research intensity at present. One of the reasons is seen in the fact that wholesalers hardly have any institutional links to research. Wrobel / Köhler / Cäsar (2016) therefore propose a package of measures to raise the innovation potential, which is aimed at the necessary changes to the entire ecosystem of the wholesale trade. This includes u. a. the establishment of its own "Research Association Wholesale eV", the creation of wholesale professorships at colleges / universities and the active involvement of wholesalers in the major research projects of the federal and state governments on all aspects of digitization and logistics.
- Hans-Otto Schenk: Perspektiven des Großhandels in the Internet Age , in: Handelsforschung 2005, ed. by Volker Trommsdorff, Stuttgart 2005, pp. 375-406.
- Joachim Zentes, Guido Hüffer, Sandra Pocsay, Rick Chavie: Innovative business models and business processes in wholesale . German specialist publisher, Frankfurt am Main 2007.
- Wrobel, H. Press, B .; Hastreiter, S .; Werr, H .; Kübler, A .: Sustainability in building technology wholesale. Stuttgart: Fraunhofer-Verlag, 2015.
- Wrobel, Heiko; Koehler, Alexander; Caesar, Estella: Wholesale in Bavaria. Market structure and digitization , Munich, 2016.
- Federal Association of Wholesale and Foreign Trade
- World Association of Wholesale Markets (in English)
- Federal Statistical Office (Destatis) Subject area internal trade . Retrieved January 24, 2018
- Study: Wholesale in Bavaria, 2016
- ZEW Industry Report Innovations Wholesale 2015
- Duden dictionary of origin. Etymology of the German language.
- Committee on Definitions for Trade and Distribution, 2006, pp. 24f. Last checked on September 5, 2016.
- Destatis, Statistisches Jahrbuch 2015. Available at: https://www.destatis.de/DE/Publikationen/Statistisches Jahresbuch/Binnenhandel.pdf?__blob=publicationFile . Last checked on September 5, 2016.
- BGA (2016). Archived copy ( memento of the original from September 13, 2016 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. . Last checked on September 5, 2016.
- Schenk 2005, p. 403.
- Wrobel et al. (2015) Last checked on September 5, 2016.
- Rammer et al. (2016), p. 1 Available at: http://www.zew.de/fileadmin/FTP/brarep_inno/issue/2015/14_Grosshandel.pdf . Last checked on September 5, 2016.
- Wrobel / Köhler / Cäsar (2016), pp. 72-76 Available at: https://www.stmwi.bayern.de/fileadmin/user_upload/stmwivt/Publikationen/2016/160727-Der_Grosshandel_in_Bayern.pdf . Last checked on September 5, 2016.